The Khaitan family’s ownership grip over the top group companies withered further after lender IndusInd Bank invoked its pledged shares in Eveready Industries India Ltd and McLeod Russel India Ltd.
The promoter holding of the family now stands below 10 per cent in dry cell battery maker Eveready, while it slipped below 20 per cent in bulk tea producer McLeod.
IndusInd Bank cornered a 7.82 per cent stake in Eveready and a 7.5 per cent stake in McLeod, respectively, on account of the loan taken by their parent company Williamson Magor & Co Ltd.
Following the invocation, Khaitans’ stake will come down to a meagre 7.25 per cent in Eveready, further widening the gap with the Burman family, the promoters of Dabur, who now holds 19.84 per cent in the company.
In McLeod Russel, the Khaitan family will be left with an 18.32 per cent share. However, they continue to remain in the management in both the entities — Aditya Khaitan is at the helm of McLeod and his nephew Amritanshu Khaitan is in charge of Eveready.
The Khaitans held 44.11 per cent in Eveready and 42.71 per cent in McLeod as on March 31, 2019 before relentless invocation of pledged shares brought down their holding.
Unlike many other shareholders, who invoked their pledged shares and offloaded them in the market — IL&FS sold 7.09 per cent in the market allowing the Burmans to scoop up a large chunk — IndusInd decided to carry the shares on its books, indicating it is possibly expecting further appreciation in the stock prices .
Regulatory filings by Williamson Magor & Co suggest that it had extended a corporate guarantee worth Rs 200 crore to IndusInd Bank on behalf of troubled group firm McNally Bharat Engineering Co Ltd during financial year 2015-16.
From the next fiscal, the corporate guarantee appeared to have routed through Seajuli Developers & Finance Ltd, an unlisted firm of the group.
The amount of corporate guarantee, however, has come down since and it stood at Rs 104.25 crore as on March 31, 2019, according to the latest data available.
On Saturday, IndusInd informed the stock exchanges that the equity shares of Eveready and McLeod Russel held by Williamson Magor and Co were pledged with the bank for securing the outstanding dues of Seajuli Developers & Finance Limited (Seajuli), the borrower company.
“The bank has invoked the pledge held on the aforesaid shares for the recovery of its dues from Seajuli,” it noted.
Going by the closing prices on Friday, IndusInd Bank’s combined holding in the two entities would stand a shade above Rs 93 crore.
Soaring stock
The control of the family is apparently slipping away at a time the Williamson Magor Group — founded by late Brij Mohan Khaitan — is seeing some good tidings in the business, which in turn is having a galvanising effect on their stock performances.
The Eveready stock has risen 80.45 per cent from July 13, a day before the Burman family announced increasing their holding by 8.48 per cent. Since then, the company also received a credit rating upgrade from India Ratings & Research, the first in three years.
Ind-Ra had cited improved liquidity position aided by deleveraging, sustained profitability, an expectation of further improvement in business profile and its liquidity position this fiscal, a possible resolution of the contingent liability issue and the possibility of a managerial/board representation by the Burman family.
McLeod, too, is inching towards a resolution of its debt problem as two of the top lenders agreed to a comprehensive recast, buoyed by soaring prices of tea this season. The possibility of a resolution and a spike in tea prices propelled the stock to Rs 13.30 on Friday, multiplying from the low of Rs 1.84 seen on March 25, 2000.
“The soaring stock prices appear to be providing the shareholders an opportunity to invoke their pledged shares and make good of the outstanding loan,” a market participant noted.
